When First Niagara Financial Group’s board gathered Tuesday for its regularly scheduled meeting, the Buffalo-based bank’s directors were feeling the same pain as its shareholders.

The 10 directors who didn’t work for First Niagara – only one of whom has ties to Western New York – owned shares worth a combined $11.5 million, and each of them had suffered steep personal losses in the value of their stake in the bank. One director, Carl Florio, had seen the value of his First Niagara stock drop by more than $3 million since joining the board in 2009.

So it was against that backdrop – with First Niagara’s shares tumbling 42 percent over the past three years – that the board cut the company’s ties with John R. Koelmel, the chief executive officer who had guided the bank on an aggressive acquisition binge that turned it into a regional banking power.

But now, analysts and local investment advisers expect First Niagara to put a heightened focus on melding those recently acquired banks into its operations in a way that boosts efficiency and enhances its profits. They expect the bank to seek out cost cuts beyond the $40 million in planned cost savings and five to 10 branch closings that First Niagara had been planning this year under Koelmel’s initiative to accomplish the same goal.

“They need to focus on profitability,” said Joseph Curatolo, the president of Georgetown Capital, an Amherst money management firm. “They need to take a break [from acquisitions] and probably shed what isn’t working.”

First Niagara’s recent acquisitions have been outside its traditional upstate New York service territory, and the bank had limited cost-savings opportunities because the newly acquired banks didn’t overlap with its existing branch network, said Gerald T. Cole, vice president of Arbor Capital Management, an Amherst money management firm.

The board named Gary Crosby, First Niagara’s executive vice president, as the bank’s interim chief executive officer and said it would launch a national search for a permanent replacement.

“This has always been a very independent-minded board, with a clear vision: To establish a formidable presence in the Northeast region and a dominant one in upstate New York,” Joseph Fenech, an analyst at Sandler O’Neill Partners, said in a report. “We think the board will continue to drive the longer-term strategy and will likely focus its search for a CEO that it believes can execute well on that vision.”

First Niagara, under Koelmel, was remarkably successful in turning itself from a small Western New York savings bank into a Northeastern banking power, with branches stretching from Buffalo to Connecticut and down to the Philadelphia and Pittsburgh markets in Pennsylvania. But critics, including analysts and some shareholders, have said First Niagara overpaid for some of those acquisitions.

“While the timing was unexpected, the announcement itself does not come as a complete surprise,” Fenech said.

Even Robert G. Wilmers, M&T Bank Corp.’s chairman, hinted in his letter to shareholders included in M&T’s annual report this year that he thought the $1 billion price First Niagara paid to acquire HSBC Bank’s upstate branch network was too high. “Every transaction has its own risks requiring a cautious approach to pricing,” Wilmers wrote. “We were less confident about the benefits of such an acquisition and, in the end, fell short of the eventual pricing.”

While First Niagara is vastly more profitable than it was before the buying binge began with its 2007 acquisition of Greater Buffalo Savings Bank, First Niagara’s shareholders did not share in the benefits from the stronger earnings, because of the way the bank paid for its acquisitions: by issuing and selling millions of shares of additional stock.

So while First Niagara’s profits last year of $168 million were 91 percent higher than they were in 2008, the bank’s earnings per share – a common measure investors use to value stocks – actually fell by more than half, from 81 cents per share to 40 cents per share. First Niagara now has more than three times as many shares in circulation as it did in 2008 – the product of a series of stock sales that raised the money the bank needed to fund its five-bank buying binge.

On top of that, it slashed its dividend in half in 2011, to 8 cents a share, to conserve capital to afford the HSBC deal. But that also angered many shareholders.

First Niagara’s tangible book value – a measure of how much the bank would be worth if it were liquidated – has dropped by 30 percent since just before it closed its $1.5 billion acquisition of New Alliance Bancshares in New Haven, Conn., in April 2011.

“I think the bank should spend a few years knitting together what it has acquired in recent years and growing tangible book value and earnings per share,” said Harvard Winters, the author of a banking industry research publication that has been critical of First Niagara’s acquisition binge.

Fenech, an analyst, downplayed the possibility that the First Niagara board would look to sell the company.

“We also think the company has a strong desire to remain independent,” he wrote.

And while First Niagara’s stock price is depressed, its main market across upstate New York generally is viewed as stable, without the rapid growth that many buyers seek in a deal.

“There wasn’t exactly a bidding war for those HSBC branches, so I don’t think there are a lot of people clamoring to get into upstate New York,” said James P. Julian, executive vice president at Robshaw & Julian Associates, an Amherst money management firm.

First Niagara also disclosed Wednesday that Koelmel will receive a severance package worth an estimated $5.45 million, because his departure is being treated as “a termination by the company for reasons other than for cause.”

Koelmel’s severance includes two years of his base salary, totalling nearly $2.9 million, along with more than $2.5 million from the bank’s incentive programs for top executives. He also will receive $10,000 for outplacement services.

As interim CEO, Crosby will receive a pay package worth more than $2.65 million. He will be paid an annual salary of $655,000, an 11 percent increase from his base pay in his former job as executive vice president. He also will receive $1 million in First Niagara stock and another $1 million cash bonus once his term as interim CEO is completed.

The value of Crosby’s severance package also was sweetened, and he will be eligible to receive more than $1.5 million in incentive pay if First Niagara meets certain performance targets.